An opinion piece in PaymentsSource takes aim at the payroll industry and suggests that it has not been adopting new digital capabilities quickly enough. The writer contends:
“… despite the significant advances in fintech every company’s most important asset, their employees, have faced decades-old processes when it comes to getting paid. Today’s modern worker, including the growing group of freelancers and 1099 employees, have not been provided payroll options that meet their unique and evolving needs.”
Although I agree that more can always be done, I think the payroll industry has historically been fairly responsive to new technology. Particularly in consideration of a fairly complex and ever-changing regulatory environment. Some advancements that come to mind:
- Payroll cards came on the scenes in the late 1990’s to offer those employees who did not have a formal banking relationship to receive payroll electronically.
- General Purpose Reloadable (GPR) cards that allowed payroll deposits followed suit.
- Posting required paystubs on-line became commonplace in the early 2000’s.
- Options to receive payroll or a portion of a person’s payroll before payday have been around for at least 10 years.
- In the last few years many GPR providers have offer options to receive payroll two days early to help close the gap for those really dependent on the timing of their payroll deposit.
- And now we are seeing the growth of options to pay individuals in the freelance or “gig” economy to receive pay by the job or daily is expanding.
The author of the opinion piece suggests:
Clearly the definition of a “typical” employee grows outdated each year. With today’s workforce unrecognizable to that of decades past, blanket and static payroll processes are no longer sufficient. The newfound variability in how and where individuals earn their income requires better, faster accessibility to wages.
Businesses must keep up with the times and address the needs of today’s modern workforce with tailored payroll solutions. Changing habits and preferences produce new financial needs that demand new options.
The traditional payroll function works harmoniously under the assumption employees use conventional banks to manage their finances. As consumer interest in technology-driven financial services and bank alternatives grows, payroll methods must also evolve to ensure all employees — even those outside the mainstream — are provided the necessary access to and control of their funds.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
